Naval contractor gets $100,000 fine

Patrick Shin had inflated a repair project for the Navy by $380,000

The owner of a construction company has been sentenced to three years' probation and 12 days in federal prison for altering price quotes for a Navy repair project, increasing it by $380,000.

While U.S. District Judge Susan Mollway concluded that Patrick Shin did not intend to cause economic loss to the government, she ruled Wednesday that there was "clearly an intent to deceive." She noted these types of crimes "strike at the heart of our system, that something needs to be done."

She ordered Shin, owner of Kalihi-based Nan Inc., to pay a $100,000 fine, payable within 14 days, because he has the ability to pay. The amount is 20 times more than the sentencing guideline recommendation of $250 to $5,000.

Shin's company won millions of dollars in defense contracts in Hawaii as a minority-owned business and rose to become the largest locally owned federal contractor in the state.

Shin tearfully apologized Wednesday in U.S. District Court, saying he made a mistake and that there was no justification for raising the price.

He described his conduct as "disrespectful" to the people with whom he has worked for many years and whom he respected.

"I was trying to make it work for everybody," he told the court.

Shin pleaded guilty in April 2004 to submitting a false document to the federal government for the repair of a pump at the Pearl Harbor Naval Shipyard. The government had asked him to submit a price quote to do the job because he was contractor for repair of another pump. At the time, he was acting on behalf of JHL Construction Inc., a company owned by his nephew James Lee, who also pleaded guilty to the same charge on behalf of his company.

Mollway placed JHL under two years' probation and ordered it to pay a $3,000 fine.

Defense attorney Sam King Jr. had argued against prison, saying Shin never intended to steal from the government and that he did what he did because of pressure to get the job done.

He said Shin has already suffered by losing millions in government work because he is barred from having anything to do with the operation of his company for the next 1 1/2 years. He also has been barred from doing any work with the government for five years.

"How many times can you pound on a person's head that didn't intend to steal from the government, but made a bad decision?" King argued.

King suggested that community service was more appropriate.

Assistant U.S. Attorney Larry Tong described Shin's conduct as "an integrity offense" and argued that six months in prison was appropriate as a deterrence.

While the contracts were never signed because the altered quotes came to the attention of the FBI, Shin's conduct "strikes at the integrity of the contracting process," Tong said. "These people are dealing with the public's money, and taxpayers have the right to know that their money is being spent properly."

Rustam Barbee, who represented JHL, argued that the company was "more of a passive instrument" of the offense.

He noted that Mollway indicated there was no allegation that JHL's officers, or anyone other than Shin, had knowledge of the fraudulent documents and participated in the scheme.

JHL, which had an existing contract to repair another pump at the shipyard, would have performed the actual work had it won the contract. Shin became involved in the negotiations because he was mentoring Lee's company.

Nan Inc. had become too big to qualify for such contracts under a Small Business Administration program that allows smaller companies to bid for government work.

Shin will be able to serve his term at the federal detention center on four consecutive weekends.